Credit Corp Group Limited · ASX:CCP
Credit — H1 FY2021 Earnings Presentation
26 slides from Credit's earnings presentation, Feb 2, 2021
Slide 1: H1 FY2021 Results Presentation
H1 FY2021 Results Presentation 2 February 2021 Thomas Beregi CEO Michael Eadie CFO Credit Corp Group H1 FY2021 Results Presentation Credit Corp Team Update 2020 I 1
Slide 2: Leadership in the credit impaired consumer segment
Leadership in the credit impaired consumer segment … ANALYTICS & DISCIPLINE OPERATIONAL EXCELLENCE SUSTAINABILITY & COMPLIANCE Australian / NZ debt buying Largest database Highest asset turnover 1 No adverse orders or undertakings History of pricing accuracy Lowest cost to collect 2 Low
Slide 3: … has delivered sustained growth …
… has delivered sustained growth … NPAT AND RETURN ON ASSETS $ 105m 20% $ 90m 15% $ 75m $ 60m 10% $ 45m $ 30m 5% $ 15m - - FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 Projected FY2021 1 Total NPAT COVID adjustments NPAT ROA 1.Midpoint of revised FY2021 guidance Credit Corp Group H1 FY2021 Resul
Slide 4: … and a solid start to the year…
… and a solid start to the year… H1 FY2020 H1 FY2021 Var % AU/NZ debt buying 1 $112.7m $113.3m 1% US debt buying $28.0m $37.3m 33% AU/NZ lending $50.2m $37.4m (26%) Revenue total $190.9m $188.0m (2%) 10% AU/NZ debt buying 1 $25.7m $27.5m 7% growth in NPAT US debt buying $3.3m $8.0m >100% driven by s
Slide 5: … with record PDL investment to drive ongoing growth
… with record PDL investment to drive ongoing growth PDL INVESTMENT AND LENDING VOLUME $ 350m $ 300m Lending volume Acquisition of Collection House $ 250m ledger book produces record US debt buying half year PDL investment $ 200m $ 150m Baycorp/Collection Strong recovery in lending House $ 100m
Slide 6: Substantial capital available to fund further growth opportunities
Substantial capital available to fund further growth opportunities FACILITY HEADROOM AND GEARING $ 400m $ 375m $ 375m 50% $ 350m $ 350m $ 300m $ 300m 40% $ 250m In a net cash position despite $ 212m record investment $ 200m 30% $ 150m $400m in cash and undrawn lines $ 120m $ 100m 20% $ 50m - - -
Slide 7: Strong debt buying operations metrics…
Strong debt buying operations metrics… AUS/NZ in line with expectations US has outperformed 1H FY2021 ∆ 1H FY2020 AUS/NZ Collections $180m (1%) debt buying Productivity $291 per hour 7% Operations headcount 1 927 (12%) Payers book 2 $1,545m 10% 1H FY2021 ∆ 1H FY2020 3 US Collections $70m 36% deb
Slide 8: … and industry-leading compliance …
… and industry-leading compliance … FY2020 AU EDR rate 1 12 months to Jun-20 US dispute rate 2 Credit Corp Credit Corp Publicly traded Other debt buyer A debt Continued industry leadership buyers Publicly traded debt buyer B Lowest EDR rate1 in AU and low US dispute rate2 - 1.0 2.0 3.0 4.0 - 0.5
Slide 9: … support a solid PDL investment outlook
… support a solid PDL investment outlook PDL INVESTMENT $ 350m FY2021 purchasing guidance $ 300m $310 - $330m $ 250m All credit issuers selling pre-COVID $ 200m FY2021 purchasing have now returned to sale pipeline of $303m $ 150m contracted at Volumes remain subdued but are February 2021 $ 100m
Slide 10: Step-up in US NPAT …
Step-up in US NPAT … US NPAT $ 9m $ 6m H1 US NPAT is up by >100% over the pcp $ 3m - H1 FY2019 H2 FY2019 H1 FY2020 H2 FY2020 H1 FY2021 US NPAT Credit Corp Group H1 FY2021 Results Presentation 10
Slide 11: … driven by strong operational performance …
… driven by strong operational performance … 25% growth in the face value of payment arrangements to A$211m has lifted collections and productivity $ 250m $ 90m $ 200m $ 60m $ 150m $ 100m $ 30m $ 50m - - H1 FY2019 H2 FY2019 H1 FY2020 H2 FY2020 H1 FY2021 US collections (LHS) Face value of US paymen
Slide 12: … and elevated purchasing over recent years
… and elevated purchasing over recent years US PDL INVESTMENT $150m Strong purchasing in FY2019 and FY2020 has built collections and payers momentum $100m COVID will suppress purchasing in FY2021 $50m FY2021 purchasing Reduced market volume pipeline of $72m contracted at Impact of monetary s
Slide 13: Despite reduced near-term purchasing, US remains a strong opportunity
Despite reduced near-term purchasing, US remains a strong opportunity While market volumes are presently contracting, Credit Corp remains: a ‘top 6’ US debt buyer with a diversified set of purchasing relationships the infrastructure to support purchasing of $200m p.a. (market share of 7%)
Slide 14: Consumer lending volumes have substantially recovered …
Consumer lending volumes have substantially recovered … LENDING VOLUMES INDEXED TO PRIOR COMPARATIVE PERIOD 100% 86% 82% Demand recovered with December 80% 79% 70% quarter application volume exceeding the prior year 60% 54% 52% New customer approval rates and 38% 40% loan amounts remain below pr
Slide 15: … stabilising the loan book
… stabilising the loan book CONSUMER LENDING BOOK AND REVENUE $ 230m $ 212m $ 181m $ 168m $ 153m Loan book balance (gross of provisions) has increased by 10 per cent since Sep-20 Lending revenue and NPAT will return to growth in H2 of FY2021 $ 78m Jun-19 Dec-19 Jun-20 Sep-20 Dec-20 Gross loan bo
Slide 16: Credit Corp remains positioned for opportunity …
Credit Corp remains positioned for opportunity … Current conditions Credit Corp positioning AUS/NZ debt Market has returned to pre-COVID activity Credit Corp sustaining strong share across all issuers buying Competitors impacted by capital market Continuing to lead the industry in compliance
Slide 17: … and will deliver a strong result in FY2021
… and will deliver a strong result in FY2021 NPAT growth of 10% expected of 20211 FY2021 guidance Revised Feb 2021 Issued Dec 2020 PDL investment $310 - $330m $270 - $330m Net lending $5 - $10m ($5) - $5m NPAT $85 - $90m $70 - $85m EPS (basic) 126 - 134 cents 104 - 126 cents 1. Midpoint of guidanc
Slide 18: Questions
Questions Credit Corp Group H1 FY2021 Results Presentation Credit Corp Team Update 2020 I 18 18 Credit Corp Team Update 2020 I 18
Slide 19: Appendices: Key Operating Metrics
Appendices: Key Operating Metrics Appendix 1: Operating cash flow and gearing Appendix 2: Pricing discipline and accuracy Appendix 3: Collections life cycle Appendix 4: Productivity Appendix 5: Payers base Appendix 6: Operational and total headcount Credit Corp Group H1 FY2021 Results Presentation C
Slide 20: Operating cash flow and gearing
APPENDIX 1 Operating cash flow and gearing Operating cash flows and gearing Jun 2019 Dec 2019 Jun 2020 Dec 2020 Pre-tax operating cash flow $167.3m $182.4m $212.3m $196.1m Tax payments ($28.9m) ($27.4m) ($7.8m) ($5.1m) PDL acquisitions, net lending and ($148.7m) ($227.7m)2 ($94.1m) ($197.8m)1 capex
Slide 21: Pricing discipline and accuracy
APPENDIX 2 Pricing discipline and accuracy PRICING DISCIPLINE AND ACCURACY Cumulative collections Actual cash $ 3,500m collections $ 3,000m $ 2,500m $ 2,000m $ 1,500m $ 1,000m Initial $ 500m projections - * For all PDLs held at June 2008, initial projections represent the forecast at June 2008 Credi
Slide 22: Collections life cycle
APPENDIX 3 Collections life cycle PDL COLLECTIONS BY VINTAGE $ 160m +6%1 $ 140m $ 120m 33% 34% 35% $ 100m 31% 32% 34% 29% 30% 12% 12% $ 80m 31% 32% 33% 32% 30% 30% 30% 32% 32% 16% 16% 18% 13% $ 60m 15% 15% 15% 12% 10% 11% 14% 18% 17% 17% 13% 14% 23% 23% 19% 25% 19% 15% 15% 16% 23% $ 40m 15% 19% 21%
Slide 23: Productivity
APPENDIX 4 Productivity PDL COLLECTIONS PER HOUR $ 350 $ 300 12m to Dec-20 Half year average $ 250 H1 FY2021: $286 $ 200 12m to Dec-19 H1 FY2020: $250 $ 150 $ 100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Credit Corp Group H1 FY2021 Results Presentation 23
Slide 24: Payers base
APPENDIX 5 Payers base PORTFOLIO SUMMARY: AU/NZ DEBT BUYING ONLY Total portfolio Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Face value $6.0b $6.2b $6.4b $7.8b $7.7b $8.6b Number of accounts 710,000 753,000 786,000 1,268,000 1,193,000 1,392,000 Payment arrangements Face value $1,300m $1,300m $1,300m $
Slide 25: Operational and total headcount
APPENDIX 6 Operational and total headcount PERIOD END HEADCOUNT (FTE) PERIOD END HEADCOUNT (FTE) Dec-19 Jun-20 1 Dec-20 2,200 2,000 Debt buying 1,455 1,378 1,281 operations 1,800 1,600 Agency 281 251 222 1,400 Lending 126 118 110 1,200 1,000 Support 133 135 137 800 600 Total 1,995 1,882 1,750 400 De
Slide 26: Thank you
Cc Credit Corp Group